Planning for your retirement

O blest retirement! Friend to life’s decline-

How blest is he who crowns, in shades like these,

A youth of labor with an age of ease!

— Oliver Goldsmith

Retirement is indeed a blessed stage of life: the children have moved out, the mortgage is paid off and you and your partner look forward to enjoying the golden days. How do we make sure this is indeed ‘an age of ease’?

Assessing monthly outgoings

First: Assess how much you would need, to take care of your monthly outgoing and meet your day to day needs after retirement. One way to do this is to assess costs if you were to retire today, in the country you will most likely live. Then double it for every 20 years between now and retirement, to inflation-proof the estimate. If regular monthly outgoing at today’s costs is $2,000 (Dh7,340), and you have 30 years to planned retirement, you would need about $5,000 per month when you retire. If you are closer to retirement, a better way would be to estimate this as a percentage of your estimated pre-retirement income, typically at 50 per cent.

An internationally accepted benchmark is that you can expect to withdraw about 4 per cent of your savings every year, and keep your net savings intact. If you estimate a monthly outgoing of $5,000, then you would need to build up $1.5 million.

Building your savings

Consulting a qualified financial adviser, assessing tax implications and exploring offshore options including vehicles such as trusts, will help to ensure your regular savings are invested right and in line with your risk appetite. Do factor in end-of-service benefits and any potential employer pension plan support.

Planning for future requirements

A basic pension plan is not enough. Try and create a pot of money to dip into for future financial requirements — a wedding gift for your grandchildren, a new car or a holiday.

What about unforeseen events?

One can never be fully prepared for unforeseen events. However, it is prudent to try and ensure your family is provided for if you are not there for them tomorrow. A good insurance plan can help protect one’s family from life’s vicissitudes. Check out a ‘whole of life’ insurance plan, that enables one to pay premiums for a short period, but ensures one is covered for one’s entire life. Be careful to also protect your home with right property and home insurance.

What about health?

Investing in a good medical insurance could take care of regular doctor’s bills, while long-term critical illness or disability plan offers additional support.

Importantly, make sure you are debt free before your retirement.

The writer is Head - Liabilities and Wealth Management, Retail Banking - Emirates NBD. Opinion expressed here are his own and do not necessarily reflect that of Gulf News.